INSEAD: Value Negotiation Final Assignment

INSEAD: Value Negotiation Final Assignment

Intro:

For this assignment, you will consider a customer with whom you have an upcoming negotiation. This
may be the critical customer you’ve been focusing on throughout the course, or another customer.
Ultimately, you will be asked to create a negotiation plan that helps both parties get realize the most
value and achieve a great deal.

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Note: Complete the 7 Elements Preparation template for your upcoming customer negotiation to
prepare for the final assignment.

1. Who is your customer? You do not need to name your customer but can describe them using
the questions below.
• What is your customer’s industry, location, & size?
• How would you describe negotiations with this customer?
• Why did you choose this customer?
300-word limit

[Disclaimer: My current role is a compliance analyst and I do not work directly with customer. However, in the
context of this course, I assume myself as an account manager for banking sector in the Subsidiary]

My customer operates in banking industry and is one of top 5 reputable banks in Vietnam. Founded in 1994
with mere 1 million USD of charter capital, XYZ bank has grown to become the third largest bank in terms of
chartered capital in Vietnam. The bank provides a broad range of products and services to more than 6 million
retail and corporate customers in Vietnam through extensive network of 1 head office, 2 representative offices
and 314 transaction offices across 45 cities and provinces nationwide. XYZ Bank signed on premise EA contract
in 2016 for 4,000 users (deal value: 536,000 USD/year). The contract is due for renewal in the next few
months.
INSEAD: Value Negotiation Final Assignment

The negotiation with this customer is described as a tough process where it took 8 months for the team to
approach customer on the opportunity, explain and change customer’s perception on MS products and finally
got their interest in the deals and trust MS as a solution partner.

The reason for choosing this customer is because is a successful negotiation case where we have turned
around customer perception about MS from ‘legalization-led’ to trusted solution partner. This case is also
the largest M365 deal to date and it will be the lighthouse dark- to -cloud example for the Subsidiary.

2. What are some assumptions you’re making about this negotiation?

a. Why do you have those assumptions?

b. What assumptions may your customer have based on past experiences with your or
Microsoft?

c. How can you dispel those assumptions during your negotiation?

When answering this question, think about the lectures: Increasing Awareness and PrimeGeo
Debrief 1: Communication

300-word limit

My initial assumption on this negotiation is that this will be a tough process which requires a lot of explanation
and negotiation with customer. To be successful in this case we will need the alignment among account team
on the approach as well as getting support from leadership team for direction and involvement in critical
moment.

a. The reasons why I have these assumptions are because customer is a State-owned enterprise controlled
by the Military and a traditional on-premises customer. They would be quite conservative about Public
Cloud when their data (specifically clients’ data) are not controlled by them but a third party. It would take
time to convince them to go with the most updated office technology in the market with the cost of 2.5
times more expensive than the current Office products that they were using.

b. The assumption that my customer might have based on the past experience of using MS was that they
thought MS as a “legalization-led company”. Our product did not add much value to customer in work,
rather they paid so as not to infringe the Intellectual Property law. Therefore, they planned to budget the
same amount of the existing EAS (536,000 USD) for the coming renewal.

c. During my negotiations, I have tried to dispel those assumption by having showcases, workshop as well as
Proof of Concept to demo to customer on how our products can help them tighten security controls,
increase work effectiveness and efficiencies. I also give them trial usage of the products for real
experience of how our products can help them in work. In addition, I have proved them how we complied
security requirement to protect customer data to clear their concerns on data security.

3. Now that you’ve chosen a customer, conduct a diagnostic using the Three Negotiations.
INSEAD: Value Negotiation Final Assignment

a. What are your concerns about the relationship negotiation with your customer? (One
example of this might be previous patterns of mixing substance and relationship.)
b. Often the substance negotiation is where you encounter the use of power. How do
you anticipate the use of power, by you or your customer, impacting your upcoming
negotiation?
c. How will you establish the communication negotiation (clear process) to have a
framework for success?

When answering this question, consider these lectures: The 3 Negotiations: From Win-Lose to
Win-Win and the PrimeGeo Debriefs: Communication and Relationship.
300-word limit
a. Concern about relationship negotiation with customer is that it would be rather difficult to build the
trust with customer and have an open conversation with them at the beginning because of the negative
feedback on past experience with Microsoft products. Customer is a State-Owned Enterprise with very
conservative way of thinking. They tend reserve their past opinion on our products and stick to it. In the
past experience of using Microsoft products, they paid more than 500,000 USD per year for 4,000 seats
of Office products and saw no difference in work efficiencies. Hence, they thought Microsoft as a
“legalization – led” company.

b. As the cost to move from on-premise to cloud is quite expensive (2.5 times more than the on-premise
option), I have anticipated customer would use buying power to request for deep discount. If the
discount offered was not of enough attractive to them, they might stick to the option of renewing the
current office products. It would be a big loss of revenue for Microsoft then.

c. As stated earlier, customer did not have good experience with Microsoft on-premise products in the
past, it will be quite difficult to have an open conversation with them at the beginning. I will instead
invite them to attend workshop on M365 products to demonstrate the power of the cloud and the
reasons to switch to M365. From that, I will find chance to get their sharing on their current pain points,
interests and mapping them with what M365 can offer. Later on, I will involve technical team to have
showcases to demo to them how M365 can help in daily operation of their business. Key personnel
team of customer can also get trial version of M365 to have real experience of how M365 is superior to
other office products. All of these are supposed to be the framework to remove customer past
experience with Microsoft products as well as to create the environment of trust to get them to share
their interests.

The following 3 questions are related to the work completed in your 7 Elements worksheet.

4. As you look at the Interests you listed in your 7 Elements worksheet and consider your and
your customer’s priorities, what are the opportunities to create shared value within the
negotiation?
When answering this question, consider the lecture: Ensures You Maximize Value
300-word limit
INSEAD: Value Negotiation Final Assignment

In the discussion with customer, I found some opportunity to create shared value for both parties which are
described as below:

On the customer side, one of their top priorities is to tighten security control over data, specifically clients’ data.
In the context that a number of cyber-attacks or bank fraud cases (identity theft, credit card fraud, wire fraud,
etc.) happened across all banks in Vietnam in the past few years, the banks have raised the security awareness
to their data and clients’ data higher than ever. Hence, having a holistic strategy for security is on the top of
customer’s concern for now. In addition, in this era of 4.0 technology, XYZ bank also shared the desire to be the
leader in digital transformation in banking industry. This will help them to enable work efficiencies, catch up
with the most current trend in the world as well as to increase their reputation in the community. The good
results of this transformation will definitely help them build trust with their clients and increase the opportunity
to have more in their client list.

From Microsoft side, introducing M365 to one of the top banks in Vietnam and helping them out with smooth
digital transformation will definitely a win-win case of M365 promotion. XYZ will be the lighthouse in the
banking industry having successful movement from dark to cloud. Microsoft, at the same time, will get the
reputation in the field and have more opportunities to work with other banks on the same thing.
From my side, winning this big deal will help to achieve my target to get a sizable bonus when exceeding my
sales quota, and to show to leadership team that I am the right person to be in charge of the account.

With this, introduction of M365 to customer would create shared value for both parties. The reasons why
Microsoft 365 can fit customer’s need is that it provides a holistic approach to security, from protecting at the
front door, to protecting data anywhere, to detecting and remediating attacks. Some outstanding features of
M365 making it premium office products which can be named are EMS (Enterprise Mobility + Security) including
IAM (identity and access management), DLP (Data Loss Prevention), MFA (multi-factor authentication),
Advanced Threat Analytics (ATP) and so on. In addition, Machine Learning (ML) can help enable work efficiency
and quality of work more professional by formatting and design suggestion in Powerpoint as well as data
insights in excel.

5. In the Options column, what are your most attractive 2-3 option bundles that align to both
your and your customer’s interests?
a. Explain why they align to both your and your customer’s interests.

When answering this question, consider the lectures: By Keeping a Balanced Scorecard and Boost
6700 Debrief 4: Anchoring
300-word limit

In this deal, Microsoft’s interest is to close the deal within the quarter to shorten the gap to the sales quota
and get as much revenue as possible to make this deal a largest M365 deal ever – a lighthouse for selling
M365 in the Subsidiary. From the customer side, they want to maximize value they get from this deal while
stay within their affordability. Considering that there are several options to move to cloud for customer to
tailor with their budget.

The first option is the full enterprise wide coverage with the most premium office products - M365 E5 for
4,000 users. Given the discount of 23% (overall), the deal cost customer about 1.3 million USD/year for the
total package (including M365 licenses for 4,000 users, Azure and other Server products). The option will
INSEAD: Value Negotiation Final Assignment

help to secure the customer’s data at the maximum. Security and threat protection are enabled in
enterprise as a whole and to all single users.

The other option is alternative way to help customer stay within budget constraint while still having some
protection over their data. This is the partial movement to cloud with 50% of M365 coverage. Given 18%
discount, this package cost about 900,000 USD for the first year. With this option, core functions in XYZ
bank will be in the priority list to install M365 E5 to ensure security to the fullest, the rest will still stay on-
premise with Office 365 to maintain the efficiency on the operation while still stay within security standards
as a whole.

6. In the Options column, what gives each of these bundles (from the previous question)
legitimacy that would be acceptable to all parties involved?
When answering this question, consider the lectures: By Keeping a Balanced Scorecard and Boost
6700 Debrief 4: Anchoring
300-word limit

Given current Microsoft office package that customer is using will be expiring soon, customer is in the
consideration of whether to stay with the same package – on-premise EAS (536,000 USD) or have digital
transformation with the price more than double. There are legitimate reasons for customer to move to cloud
with details as below:
Option 1: Full transformation to cloud with security protection to the fullest, cost 1.3 million USD/year, given
discount of 23%.
Cyber-crime and cyber-attacks are becoming more industrialized and more organized in the past few years.
In the era of 4.0 technology, they are growing to be big business threats to financial sector. A number of theft
cases in banking sector were reported due to cyber-attacks and identity theft. Needless to say, the losses from
the loopholes in security cost the banks much more than the investment in the protection of banking data.
Reputation reduction of the bank after each theft cases is the thing that is out of people control. The losses
of (potential) clients are also the thing that every bank should count for. With this consideration, customer
will still gain in the long term if they choose to equip themselves with the most premium office products.
From Microsoft side, giving customer the discount of 23% will still help Microsoft stay within profitable range
while winning the deal also help the Subsidiary to shorten the gap to reach the sales quota.

Option 2: Partial transformation: 2,000 users in core functions move to cloud in the first year, the rest of the
users (2,000) will move to cloud in the next year, cost 900,000 USD for the first year, given discount of 18%.
Given the sharing of customer on budget concern and the prior preparation before going to cloud (data,
training for employees, management, ect.), they can go with the option of gradual transformation. Microsoft
can customize the offer to fit in customer’s budget and give them more time for internal preparation before
having full transformation.
From Microsoft side, this option is still better than another on-premise renewal scenario. Microsoft get less
revenue for the first year but secure long-term profitability in this deal.

7. How will “value creation enemies” (narrow scope, artificial limits, or resource constraints)
interfere with achieving a great deal?
INSEAD: Value Negotiation Final Assignment

a. How can you mitigate those limitations?

When answering this question consider the following lectures: Boost M6700 Debrief 1: Interests
and What are Difficult Behaviors?

300-word limit

In this deal, I anticipate that value creation enemies will have some interference that prevent us from
achieving this great deal as below:
1. Narrow scope
Originally, we had chance to work with IT manager of customer only. This person has no authority in
giving the decision on the change of renewal plan (from on-premise EAS to cloud). Therefore, we have
proposed our desire to get opportunity to meet the Chief Information & Security Officer and involve
him in our discussion to get his interest in knowing more about our M365 products.
2. Artificial limit
As stated earlier, customer had the pre-assumption that Microsoft is a “legalization- led” company,
they did not see the return on investment when buying our EAS products, therefore, they planned to
budget the same amount of money for the coming renewal. With this assumption, I have tried to
mitigate the limitation by demonstrating them how technology has changed and how much our
products have improved in the past few years, especially with the introduction of M365 in 2017. From
that, I have got their interest in our most premium products and willing give more budget to the
investment.
3. Resource constraint:
Even though customer has been willing to give higher budget to go with Microsoft 365, the initial offer
was still of significant amount to them. Therefore, they asked for deep discount of 30% on Estimated
Retail Price. With this request, I have got to discussed with them the reason why they set the request of
30% and got the sharing that the budget for the renewal had been reported and approved at the
beginning of fiscal year. They have managed to get budget transfer from other functions for this
investment but still could not manipulate within the budget without discount. To mitigate this
limitation, I got to explained to them and got their understanding on our internal discounting policy
where we are willing to support them with 30% discount on M365 products. However, we are unable to
offer them the same for Azure (no discount) or other SKU in the same package.